The government has shelved its promise to ban pubs and nightclubs from offering cut-price alcohol through events such as happy hours, even though Gordon Brown championed the move as vital to tackle binge drinking.

Plans for a tough new mandatory code on "irresponsible" alcohol promotions before next year's general election have been delayed indefinitely by ministers. It was intended to end schemes such as drinking games, free alcohol for women and offers of unlimited alcohol for set sums, which critics claimed led to violence, accidents and rowdy behaviour.

The prime minister made the pledge in May as part of a speech on crime. "We are going to bring in a new mandatory code on the sale of alcohol – not, as some have asked, bringing in a minimum price, which would punish the majority of responsible drinkers – but to tackle binge drinking, targeting the kind of promotions like 'Drink all you can for a fiver', which can turn some town centres into no-go areas," he said.

But Whitehall sources have confirmed that it will not be introduced ahead of the election, expected in May, after determined opposition from the drinks industry and a dispute within government. Peter Mandelson has argued in favour of delaying the change and the Treasury has also lobbied against the move. Both said Labour should not proceed with a policy that would impose new burdens on the drinks retail trade or do anything that would threaten the viability of pubs, especially during a recession. Pub leaders had claimed that it would cost them £58m to implement and a further £38m in annual running costs.

The home secretary, Alan Johnson, a keen supporter of the move, has accepted that the code will not go ahead in the near future and is concentrating on trying to get a commitment to proceed with it in Labour's election manifesto.

The code, which is already in draft form, was intended to put five new conditions on to the licences of premises selling alcohol. The first bans "irresponsible promotions, such as 'all you can drink for £10' or speed drinking competitions, or any promotion that encourages the consumption of large quantities of alcohol or the rapid consumption of alcohol that could increase the risk of alcohol-related crime and disorder, public nuisance, and cause a risk to public safety".

Other conditions banned alcohol from being poured directly into a customer's mouth, ensured that smaller measures were available and compelled premises to make free tap water available.

But civil servants have told the drinks trade, which has mounted a vigorous and sustained offensive against the proposed code, that it will not be happening. "We can probably assume that the mandatory code is face down in the water," said one industry figure. Recent moves by retailers and manufacturers to appear more responsible, such as the Challenge 21 scheme to ensure drinkers are not under-age, may have helped to convince Whitehall that the industry is cleaning up its act.

The Policing and Crime Act, which became law last month, gives ministers the power to introduce the code. But public health campaigners said they had little confidence it would happen. "We think there's a risk this initiative could get lost in the pre-election clearing of the decks and never see the light of day," said Professor Alan Maryon-Davis, president of the Faculty of Public Health, which represents public health specialists working in the NHS and local councils.